Mortgage, Insurance and Pensions

Debt Management Plan

A debt management plan is a solution which anyone in the UK can enter however whether it’s the best debt solution is dependant on each persons circumstances.

Some people we only be in a debt management plan for a short period of time, until they get back into work or selling their property to release equity. In other cases people may stay in the debt solution until their debt is repaid.

Debt Management Plan: Where To Start

To start a debt management plan people can either speak to the creditors themselves, pay a debt company to do it or have a debt advice organisation do it for free.

Most people opt to have a debt advice organisation setup a plan for free because it means every single penny from the monthly contribution goes to repay debt.

Once someone speaks to a debt advice organisation who manage the debt management plan they will ask for a breakdown of their income and expenditure.

This should show a disposable income which can be used to repay the debt but the organisation should be able to help make this work.

Debt Management Plan: Who Should Enter It

A debt management plan shouldn’t last longer than 5 years unless there’s specific reasons such as it’s a temporary solution or other solutions aren’t suitable. When calculating how long the debt management plan will last it’s important to include the interest and charges incurred, unless they’re frozen.

The people who should most consider a debt management plan as a solution to dealing with their debts are those who meet the following criteria.

Disposable Income: This is to enable the person in debt to be able to afford the debt management plan

Debt Rapid Within 5 years: The debt including interest and charges shouldn’t last too long otherwise another solution should be considered

Debt Above £5k: Most free debt management organisations require people have at least £5k in debt before they will start the solution

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